Fund-of-Funds Manager Failed to Oversee Outsourced Due Diligence
The SEC fined and barred a fund-of-funds manager that outsourced its due diligence to a third party that failed to perform. According to the SEC, the respondent touted its due diligence capabilities and process in marketing materials without disclosing that the firm had outsourced all due diligence to a third party. The SEC charges that the firm never supervised the third party, which failed to perform due diligence services in breach of its agreement with the respondent. The SEC also charged the firm with overstating assets under management and misleading performance claims.